Underbanked
Candlefocus EditorThe Federal Reserve reports that approximately 13% of US adults can be classified as underbanked. This means that there are over 1/8th of society who do not have access to or utilize standing banking services. This can be for a number of reasons including being low income, undocumented, geographically isolated, or distrustful of traditional financial institutions.
Underbanked households often rely on cash or alternative financial services to fund purchases and manage their finances. They might look to payday loans, store front lenders and pawn shops in order to gain access to credit or money when needed. In addition, many of these households or individuals don’t feel their finances are secure enough or that their banking needs are taken care of.
Though the traditional banking and financial industry report consistently every year, underbanked individuals and households have limited access and knowledge of the tools available to them to manage their finances. In an effort to bridge the gap, a few companies are taking on the challenge. These companies are committed to helping the unbanked by providing free financial literacy tools, access to digital banking tools and mobile app technologies.
In conclusion, it is important to recognize the tremendous number of individuals and households in the US who are considered underbanked. The lack of access to traditional banking services and financial tools available to them in comparison to the rest of the population can have long-term financial ramifications. With efforts from financial institutions, alternative financing providers and technology companies, the goal is to provide accessible financial services to the underbanked and help them on the path to financial well-being.